Bad deal book

Ohio State law school professor Steven Davidoff has written an analysis of the economics of law school for a New York Times' Deal Book "special section" on "the future of Big Law."

Davidoff begins by noting that veterinary schools aren't being called a scam or a bubble even though veterinarians make less than lawyers and pay even more to go to school.  I suspect there's a simple explanation for this: people who graduate from veterinary school get to be veterinarians.

Veterinary schools in the US produce just 2500 graduates a year (Harvard, Columbia, NYU, Georgetown, and George Washington by themselves collectively produce more lawyers), and the number of jobs for veterinarians is projected by the BLS to increase by 38% over the course of this decade.  I gather from several minutes of internet research that, to the extent that vets face any employment difficulties, this is a product of the fact that more prefer to be pet doctors rather than large animal vets relative to the available job opportunities. But if you graduate from veterinary school and want to be a veterinarian, you get to be one. In this regard, veterinary school graduates resemble medical and dental school graduates, who get to be -- check this out -- doctors and dentists.

Davidoff's whole analysis is premised on a fundamentally faulty assumption, which is that law school graduates get to be lawyers.   Law professors, still stuck in their world of Columbia law degrees and federal appellate clerkships and Shearman & Sterling associate gigs, constantly make the mistake of thinking -- well not really thinking, but rather semi-consciously assuming -- that their students are going to be lawyers.  This assumption is going to be wrong in regard to an enormous percentage of people currently enrolled in ABA-accredited law schools -- even at "good" law schools like the one Davidoff started teaching at this past year (previously he was at Wayne State and UCONN, where he taught lots and lots of students who did not become lawyers). Any analysis of the situation that fails to grapple with this point is missing the central fact regarding the crisis of the American law school.

Davidoff examines the idea of controlling law school costs by making law school more skills oriented and by cutting faculty compensation. As to the first alternative he points out that more clinical courses will actually drive up costs, which is certainly true assuming one were to maintain the current structure of American legal education (that this structure could be dispensed with altogether at little or no cost to anyone other than law professors is not a thesis Davidoff appears willing to entertain).

As to the second alternative, Davidoff's argument comes down to the claim that law professors don't make much in comparison to "law firm partners," and that if we were to cut faculty compensation this would lead to faculties being staffed by less "qualified" people.  This part of Davidoff's analysis is especially sloppy, so I'm going to spend a bit of time on it.

Note that Davidoff cooks his numbers quite a bit:

The average senior law professor who is not at a top-ranked school makes $130,000 to $150,000 according to a survey by the Society of American Law Teachers. It’s a nice salary, but certainly not comparable to what a law firm partner earns.

This assertion plays very fast and loose with the definition of both "top ranked law school" and (especially) "law firm partner."  Unless "top ranked law school" is a category that includes half the law schools in the country, the assertion about average compensation levels for senior professors is seriously understated, as a glance at the salaries of the senior faculty at his own school reveals. Indeed $130,000, or something fairly close to that, is now the starting salary for tenure track professors at many law schools that nobody would consider particularly elite.  (Starting salaries at top schools are quite a bit higher).

But the bigger problem with Davidoff's assertion is that "law firm partners" make far more than $130,000 to $150,000 per year.  This is obviously not true, unless by "law firm partners" one means primarily "partners at national law firms," who of course make up a tiny percentage of all law firm partners, let alone all practicing lawyers.  Davidoff is in effect comparing the lowest-paid law professors to the highest-paid lawyers.  Law professors, even law professors at other than "top ranked" schools, have higher average salaries than "law firm partners," and the only way one can miss this fact is by, characteristically, focusing on only the very top of the legal employment pyramid.

This is precisely what Davidoff does, when he asserts that cutting faculty salaries will make it much harder to recruit good faculty because "good practitioners are likely to be even more expensive than law professors. After all, the average partner at a big law firm can make well over a million dollars a year."  This is absurd.  It assumes that "good practitioner" is a category that's exactly co-extensive with "partner at a handful of elite law firms" (at how many law firms in this country does the "average" partner make "well over a million dollars a year?").  It also assumes that a common alternative career choice for law professors is to stay at an elite law firm and make well over a million dollars a year as an equity partner.  (Otherwise what possible relevance does the average partner draw at, say, Shearman & Sterling, have to the recruitment of future law professors?).

It's hard to say which of these assertions is more ridiculous: let's call it a tie.

Moving right along, when considering different types of law schools Davidoff engages in more analytical sleight of hand:

There is . . .  a qualitative difference between the top 15 law schools and the rest. These elite schools charge sky-high tuition that can exceed $50,000 a year. But graduates have a good chance of securing a coveted job with a starting salary of $165,000 a year — a salary that is likely to improve as the economy does. For a 26-year-old, that’s certainly good money. Duke, for instance, which was No. 11 on the U.S. News rankings, said its graduates had a 95 percent employment rate last year, with an average private sector salary of $160,000.

There may be valid criticism about lower-ranked law schools, particularly those U.S. News places in the third and fourth tier. Such private schools often charge significant tuition but do not obtain the same employment outcomes. The question is whether changes can be made to lower their costs, and whether this will lead to better opportunities for their graduates.

It's unclear what Davidoff means by "a salary that is likely to improve as the economy does." Is he arguing that starting big law salaries are going to go up eventually in real terms?  If so, this is far from clear, and even if it is it will remain irrelevant to the 85% to 90% of law school graduates who will never be in such a job, including in particular the 85% to 90% of Davidoff's own OSU students who won't get such jobs. Or he may mean that law graduates who start at $165K will make significantly more than that as their careers develop. This of course is very often not true, and is increasingly becoming less so.

But the biggest elision here involves the 85 schools between the "top 15" and the one hundred in the third and fourth tiers.  (Note how Davidoff casually concedes that the economics of law school make no sense at at least half of all law schools.)  What about all the "well ranked" law schools -- the solid majority of the first tier and all of the second -- that are hardly more successful in placing graduates in big law than their third and fourth tier country cousins?  If the economics of law school at such places resemble those of low-ranked schools far more than they do those of schools like Duke --and they do -- isn't that a bit of a problem? (And as a a commenter points out Davidoff's account also implies strongly that all is more or less well for graduates of the T-14 these days which of course isn't true either).  Given that Davidoff happens to teach at one of those 85 schools, not addressing this precise point seems like something other than an oversight.